Capitalization is the practice of converting costs into assets with the intent of depreciating the cost over time.

Market capitalization refers to the value of a company's stock, specifically the value of its outstanding shares. This number is one tool investors use to compare different companies within a given sector.

Using this formula, a company with 10,000 outstanding shares and a current price of $50 has a market capitalization of $500,000.

You need to know about capitalization because it is a useful tool for reducing tax liability. This is especially important if you are a small business owner.

f you use debt to fund or expand the business, capitalization can create a way to lower your tax liability, so you have more money available to operate the business.

Using capitalization can also be helpful if you're looking for investors. By spreading the cost of the asset over time, you don't have to cut into your profits.

. Investors want to make money on their investments, and lenders want to make sure the business will be able to pay back the money it borrows.

These groups are more likely to pass on a company that doesn't seem to be making money.